Malaysia-based online video streaming service iflix has announced that it has secured a new round of funding ahead of a prospective IPO. The company estimated that the total funding will amount to more than $50 million, although an exact amount has not been disclosed. The funding round was led by Fidelity International, while new investors are MNC, Yoshimoto Kogyo and JTBC, together with founder Catcha Group, and strategic shareholders Hearst, Sky and EMC.
Iflix is currently available in 12 countries in Asia – Malaysia, Indonesia, Philippines, Thailand, Brunei, Sri Lanka, Pakistan, Myanmar, Vietnam, Cambodia, Nepal and Bangladesh.
Iflix will use the latest funding round to grow the business as well as further user acquisition. Through this deal, the streaming service has established relationships with Asian content companies which are Indonesian media company MNC, Japan-based entertainment company Yoshimoto Kogyo and South Korean-based subscription network and broadcasting company JTBC. The underlying reasons for iflix’s success in generating funding are clear. By investing in iflix, these content groups will be able to strengthen their position from gaining insights about the online video industry in emerging markets in Asia, while diversifying their companies’ portfolios.
Iflix refocuses its business on emerging markets in Asia
Iflix carried out aggressive global expansion plans in 2017. The streaming service established joint venture iflix Arabia with telco partner Zain in February 2017 and the service was launched in the Middle East and North Africa region (MENA) in April 2017, followed by iflix Africa launch in June 2017. Despite partnerships with local operators, these ventures have been challenging and iflix failed to attract substantial numbers of subscribers in these regions. IHS Markit estimates that the subscribers in MENA and Africa remained less than 5% of iflix total subscribers during its two years of operations in these regions. The technology and smartphone penetration of emerging markets in Africa and Middle East made the process more difficult.
Iflix decided to sell its Africa business, Kwese iflix to local partner Econet Global in December 2018. For its business in Middle East, the company confirmed in July 2019 that it and Zain are working together to complete the wind down of operations in the Middle East to allow iflix to focus on its core markets in Southeast Asia. This removal of business from iflix’s portfolio will help the company to increase iflix valuation before going public.
Iflix has been increasingly focused on offering more Asian content to its catalogue and making iflix more accessible to local audiences. It rolled out daily and weekly ‘sachet’ packages earlier this month, enabling smaller one-time or recurring payments for customers to gain access to the premium iflix service for lengths as short as a single week. Developed in partnership with mobile technology company Fortumo, this new payment plan was introduced to attract more price-conscious users to pay for the service.
Iflix shifts its strategy to focus on advertising supported business
In April 2018, iflix introduced advertising supported video on its service to attract younger audiences with less disposable income and create mass appeal, making advertising a new source of revenue for the company. As a result, iflix managed to double its monthly active users from 9 million in November 2018 to 17 million in May 2019.
Online video players often struggle in the challenging Southeast Asian market, where pirated content is usually widely available and consumers' propensity for paying for content is low. Subscriber churn rate is also high despite high growth in subscription userbase. As user engagement and retention remain the key to success, freemium could be the best solution for OTT players in this emerging market. Apart from localisation and competitive pricing strategies, increasing accessibility is now iflix’s main focus to drive its advertising business.